Childcare costs jump to equal private school fees

Childcare costs have jumped in the past decade to the point where they are often now roughly the same as private school fees.

Statistics NZ data, requested after an IbisWorld survey found a big jump in the cost of raising children, shows that early childhood education prices paid by parents rose by 34 per cent in the nine years to the end of 2017 – more than twice as fast as a 15 per cent rise in general consumer prices in that period.

A Hamilton couple said they paid $240 a week for childcare for their son until he turned 3, or $11,520 for a 48-week year.

For comparison, they are paying $14,560 a year for their 6-year-old daughter in an Anglican private school.

Other families who commented on the IbisWorld survey reported paying up to $320 a week, or $15,360 for a 48-week year, in childcare costs for a preschooler.

An Auckland mother said she paid $320 a week for her 20-month-old son to be in care from 7.30am to 5pm Monday to Friday, or 47.5 hours a week – about $6.74 an hour.

“To be honest, no I am not getting value for money,” she said.

“My son has had to endure five staff changes in the past year (his direct carer) which has caused him and myself anxiety. They have such a high turnover of staff that they don’t seem to be all on the same page when it comes to the care of my son.

“He has had severe nappy rash to due to teachers not communicating and forgetting to change his nappy.

“He has a serious dairy allergy and a relief teacher gave him some other child’s formula which could have had serious consequences. Luckily he didn’t react as seriously as on previous occasions.”

The Hamilton mother said she and her husband were very happy with their son’s care at Little Sparrows Educare in Hamilton, but she did not know how lower-income families could cope.

“I think it’s worth it in that they look after them very well, they get a good education and they have responsibly-run programmes,” she said.

“It’s more that if you compare it to private education, it shouldn’t be that much. If you are trying to make ends meet and working fulltime and forking out that much, it doesn’t stack up.”

A solo mother said she paid a “crippling” $215 a week for fulltime childcare for her daughter, eating up more than a quarter of her salary.

Another family said they were paying a total $480 a week for fulltime care of two children aged 2 and 4.

“We are hanging out for our son to turn 3 in August, which takes it down a bit,” they said.

Statistics NZ said its last childcare survey in 2017 found that parents were paying average childcare costs ranging from $1.82 an hour in Pacific Island centres up to $5.58 an hour in non-ethnic private childcare centres and $6.80 an hour in home-based childcare.

Kindergartens, which used to be free and still get higher state subsidies, charged parents an average of $2.64 an hour.

The overall early childhood education component of the consumers price index (CPI) dropped by a third when the last Labour Government introduced 20 hours a week of free childcare for children aged 3 and 4 in 2007, and continued to rise by less than the overall CPI until the end of 2009.

But early childhood fees then jumped by 16 per cent in 2010-11, and kept rising faster than overall consumer prices through to the end of 2017.

Early Childhood Council chief executive Peter Reynolds said the increases reflected decisions by the 2008-17 National Government to stop paying higher subsidies to centres with 100 per cent qualified teachers, abolish the childcare tax credit, remove support for provisionally-registered teachers and freeze remaining subsidy rates except for non-wage-related costs.

However, he said National also relaxed restraints on approving new centres, which has led to a proliferation of new centres to a point where Child Forum director Sarah Alexander says supply now exceeds demand in many areas.

That has sparked competition for children which held fee increases to 1.5 per cent last year, below an overall 1.9 per cent rise in consumer prices.

Last year’s Budget also provided the first increase in subsidy rates since 2014 – a 1.6 per cent rise which took effect from January 1 this year. Centres with at least 80 per cent qualified teachers now get Ministry of Education subsidies of $12.31 an hour for children under 2 and $6.81 an hour for children aged 2 and over, or more for up to 20 hours a week for 3- and 4-year-olds.

Low-income families can also apply to Work and Income for up to $5.13 an hour to cover the remaining fees.

Average costs per hour, 2017

Home-based early childhood education (ECE): $6.80

“Other” (private) ECE: $5.58

Play groups: $3.07

Kindergartens: $2.64

Kōhanga reo: $1.88

Pacific Island ECE: $1.82

Overall average: $5.05

Source: Statistics NZ Childcare Survey. Figures are fees charged to parents, excluding Ministry of Education subsidies. Low-income parents can claim Work and Income subsidies to cover part or all of the fees.